Social Entrepreneurship (SE) is making breakthroughs by creating employment, competitiveness (Aparicio et al., 2021), and social value rather than with a profit-making motive in the Latin American region with its complex societal challenges. In 2021, 201 million people lived in poverty, and 86 million were in extreme poverty. The world is dealing with a demographic time bomb as jobs and job creation is scarce vs the number of people that need employment. Everybody is entitled to work without facing discrimination (which at the same time enriches entrepreneurial action) (McKague et al., 2015) and, as such, to decent and productive work that will address and end poverty and hunger by 2030 (Galiano-Coronil, 2021).
SE adapts to particular contexts and plays a meaningful role in incorporating the social component of assisting and empowering the poor (Diochon et al., 2017; Fairbourne et al., 2007; García Alonso et al., 2020), especially vulnerable groups that are “left behind” and affected disproportionately by both unemployment and poverty. Examples of such vulnerable groups include people with disabilities, migrants, ethnic minorities, Indigenous people, LGBTQI+, women, children, ex-combatants, and the elderly (this list is not exhaustive, as there are no globally accepted criteria for identifying vulnerable groups) (Breitbarth et al., 2021).
Vulnerability and poverty are convergent phenomena that share multiple links such as formal employment (Renko, 2013; Wu & Si, 2018), which, as a result of its modernization, requires that people have a quality education in order to obtain jobs. Precarious levels of education in the most VG make it difficult to break out of the cycle of poverty (Barrios et al., 2019). Not to mention informal employment, also positively related to the increase in poverty and widely carried out by migrants, women, and other VG (Williams et al., 2017).
LAC and the world require innovative business solutions that contribute to the achievement of the Sustainable Development Goals-SDGs to eradicate poverty (SDG#1), hunger (SDG#2), generate decent work and economic growth for all (SDG#8) and the reduction of inequalities (SDG #10) by 2030, business models where the productive capacity of the BOP is developed, while generating employment opportunities, income and wealth for the vulnerable population (Alonso et al., 2020; Verwaal et al., 2021).
However, all these intentions still remain challenging due to external and internal barriers to the scalability of BOP business models (Decker & Obeng Dankwah, 2022; Dembek & York, 2020). Specific type of organizations-e.g. B-Corporations, Worker Owned Corporations, Crowd-Funded Corporations (Dentchev et al., 2016) or Community Enterprises (Buratti et al., 2022)´s one-size-fits-all approach, adapted from developed markets, gives rise to the disruption of the triple bottom line at the BOP (Ernst Verwaal et al., 2021). More initiatives should value the BOP as entrepreneurs and co-inventors (McWilliams et al., 2017; Smith et al., 2020), adapting to each country´s conditions while generating economic, social and environmental benefits (Kumar et al., 2022; McWilliams et al., 2017; Yessoufou et al., 2018).
BOP and inclusive business model research have evolved during time. Dentchev et al. (2022) state that BOP 1.0 (where multinational companies could benefit due to the existing potential market in the BOP); BOP 2.0 (the co-creation of products and services was possible in the BOP) and BOP 3.0 (focuses on the entrepreneurial activity of businesses in the BOP), the microfranchising is aligned with BOP 2.0 and 3.0. A first generation research focused on the BOP as a market-niche only (Kuo et al., 2018; Leposky et al., 2020; Sengupta et al., 2020); a second one considered BOP as consumers (Borchardt et al., 2020; Decker & Obeng Dankwah, 2022; Ladd, 2017; Leposky et al., 2020), and a third BOP approach that integrates the principles of the bottom line (Geels, 2014; Verwaal et al., 2021); focusing on mutual value creation (Dembek et al., 2018); investing requirements at the BOP (Dembek & York, 2022); and scaling strategies at the BOP (Derks et al., 2022).
In this last bottom-up social approach, there is more involvement of the local/vulnerable communities with intentions to understand further the geographical origin and activities performed (Buratti et al., 2022). Some studies focused on income-generating opportunities for indigenous (Roy, 2022); young children-the segment considered most vulnerable to poverty- (London, 2021); migrant entrepreneurs (Liu et al., 2022); elderly (Malik et al., 2022; Xu & Yang, 2022); women street vendors (Thanh & Duong, 2022); youth-unemployment´s most vulnerable group- (Mseleku, 2022) or Low-status expatriates (Haist & Kurth, 2022). Majority of the research has been focused on Asia (China, India, Malaysia, Indonesia, Hong Kong, South Korea) and Africa (Ghana, Nigeria, South Africa, Kenya), from LAC, only Ecuador, Argentina and Brazil have been studied. Thus, there is a lack of empirical evidence to understand the mechanisms that lead to the success of the microfranchise (one type of inclusive business model) at the BOP, under a particular institutional, cultural and social context and the succesful inclusion of vulnerable groups, specifically women displaced by Colombia’s internal conflict, that is, victims of the Revolutionary Armed Forces of Colombia (FARC) as well as its ex-combatants.
This paper examines microfranchises for vulnerable groups in Latin America, and how microfranchises can scale to provide a higher impact on society. Microfranchises or simply franchising is an inclusive, scalable, and sustainable business model that can help overcome this challenge and replicate a micro-enterprise with a minimal initial investment. To the best of author´s knowledge, this is one of the first studies researching microfranchises and victims of the conflict and ex-combatants in post-conflict Colombia.
The field of knowledge (FOK) on microfranchising, socio-economic inclusion of women victims of an armed conflict and FARC-ex-combatants is growing, and still needs more rigor in theorizing and usage of state-of-the-art research methods (Dentchev et al., 2022). Previous work in field´s top journals has usually focused on the “top of the pyramid”/upper management, and the key matters for them are leadership, innovation, decision making, human resource management, or strategic planning. Despite the fact that the 4 billion people who live at the BOP require attention, there is still a large research gap between where it is and what has to be done. The societal impact of management research needs to be addressed more forcefully in order to advance the greater good of humanity.
In the same way, the literature shows the absence of longitudinal, multidisciplinary studies, of quantitative methods, as well as insufficient research to clarify the mechanisms that lead to the success of a microfranchising and the influence on the microfranchising of the cultural and social context (Awuh & Dekker, 2021; Dentchev et al., 2022).
The need to address such knowledge gaps is well expressed by Dentchev et al., (2022,p.8,9): “the BOP field of research is a promising one but rigor in theorizing could be improved” and “we encourage studies of BOP strategies from novel theoretical perspectives and BOP business models”.
Previous work has addressed the difficulties of access to the capital of the microfranchising in the BOP (Christensen et al., 2010); institutional barriers that prevent the sustainability of microfranchising (Caridad et al., 2020); the motivations of the franchisors (Awuh & Dekker, 2021); their innovation from a network perspective (Lawson-Lartego & Mathiassen, 2021); microfranchisees backgrounds influence and the combination of the microfranchising with other business models in the BoP to ensure its success (Hart, 2007). A closer look at the literature helps to identify new perspectives on microfranchising in the BOP, highlighting the importance of context in the adaptability of entrepreneurs in BOP 3.0 (Lawson-Lartego & Mathiassen, 2021); the positive correlation between the spatial distribution of the microfranchising and the growth of its network of interest groups in the BOP 3.0 (Nunes et al., 2019); the absence of a particular contract for the microfranchising and therefore its alignment with the contract used by the franchise association of each country BOP 1.0 (Illetschko, 2017) and how stakeholders use intersectoral alliances to counteract the scarcity of resources and other difficulties institutions in BOP 2.0 (Christensen & Lehr, 2014).
According to Robinson et al. (2011), this study followed their model and defined the following research gaps: (1) The Population gap refers to the lack of research on BOP business models with women displaced, victims of the conflict and FARC ex-combatants, (2) The Theoretical gap refers to the juxtaposition of an innovate theoretical lens, the Theory of Planned Behavior (TPB) de Ajzen (2005) to analyze the motivations and reasons to create a microfranchise and to acquire one with the Institutional Theory (DiMaggio & Powell, 1983) to analyze how the microfranchises overcome institutional barriers. To the best of author´s knowledge, this will be one of the first studies using these lenses to propose a conceptual model to study microfranchises and predict and individual´s intention to engage in a behavior. (3) The Knowledge gap addresses the lack of specific regulation for microfranchises (which has not been an impediment for their development) and how its “institutional equivalent”-the franchises (Marquis & Tilcsik, 2016) have helped them to operate in Colombia.
Few researchers have addressed the theme of value creation by microfranchises with a social focus, rather than a pure focus on generating profits. This research elaborates on the meaning of the success of a microfranchise that includes people from vulnerable groups while using recent advances in digitalization and technology Robotics Process Automation, Big Data, and Analytics in Colombia. The aim of this paper is twofold. First, it provides a comprehensive literature review of the scientific knowledge about microfranchises in Latin America published between 2000-2022 in Scopus. Second, applying the Institutional Theory and the Theory of Planned Behavior as our theoretical lens, the authors develop and analyze one qualitative case study to identify the social and economic impact of a microfranchise in the selected vulnerable group, that is, female victims of the internal conflict in Colombia.
In order to move forward the microfranchise field and according to the gaps, this study used a mixed methods methodology, “the third methodology” or research along with quantitative and qualitative methods within a single study or in multiple phases of a study (Zhou & Wu, 2022) and the Triangulation Design as its approach to support the findings (Smajic et al., 2022). The authors apply an in-depth case study (interviews and observation) of a microfranchise led by women displaced by Colombia’s internal conflict, that is, victims of the Revolutionary Armed Forces of Colombia (FARC). Subsequently, the authors triangulate our findings with secondary data.
The microfranchise TechOil was founded in Colombia in 2015, as part of a special project called “Soluciones Innovadoras para la Inclusión Económica de Grupos en Pobreza y Exclusión” supported by the United Nations Development Programme (UNDP), the government of Korea, Cartagena local chamber of commerce and Colombian hotel associations. The objective of this project was climate change mitigation, sustainability, and economic inclusion of the base of the Pyramid (BoP). TechOil uses corporate waste to create second-generation raw materials, extending the life cycle of waste. In this specific case, used vegetable oil is transformed into biodiesel to produce fuel with a lower environmental footprint, meaning waste products are prevented from causing pollution and affecting urban infrastructure and water sources. The model is sustainable and ensures that waste generated by medium-sized companies is properly disposed of and certified, using Robotics Process Automation, Big Data, and Analytics in biofuel production, supply chain, model predicting, and route planning. TechOil collaborates with people displaced by violence, single mothers, and young people at the BoP and has doubled the job creation, by growing through cohesive microfranchises which pursue common interests located in different cities such as Bogotá, Cartagena de Indias, and two additional common locations affected by Colombian armed conflict: Urabá and Llanos Orientales.
This study has demonstrated the success of TechOil, confirming the positive impact of female entrepreneurs as peacebuilders, contributors to formal employment and decent salaries, and promoters of competitiveness and female empowerment through microfranchises. This study also shows TechOil's close collaboration with other vulnerable communities, including displaced people and young gang members.
This article has explained how TechOil, a microfranchise in Colombian, has included women victims of the conflict and other vulnerable communities at the BoP, which is a crucial aspect of sustainable development. This study is also a valuable addition to the existing literature on microfranchises in post-conflict setting.
Colombia requires a model to develop the productive capacity of the BoP population, generate income and wealth for the population living in poverty, and innovative and inclusive solutions to eradicate hunger and poverty by 2030 by the SDGs. Thus, the microfranchise emerges as an opportunity to address serious structural problems such as inequality, informal employment, and exclusion. The microfranchise in itself constitutes a social innovation that responds to local conditions and real market needs to overcome poverty, its multidimensional causes, and the inclusion of the BoP population, which require a vehicle to promote business initiatives that suffer from a lack of access to capital.
The benefits microfranchises provide to the BoP arise through alliances, a higher proportion of income, and jobs for the elimination of poverty. Microfranchise initiatives face certain obstacles to developing the BoP including weak networks, limited training and capacity building, legal challenges, lack of access to capital, poor working conditions, elevated levels of harassment by the authorities, and limited resources and marketing. In consequence, microfranchises seeking to minimize underprivileged populations and increase social benefits must focus on creating job opportunities through profitability and organizational financial preservation as that is where scalable growth lies.
This study also offers for Latin American policymakers, who should prioritize the formation of public-private intersectoral alliances and international cooperation to strengthen the entrepreneurial ecosystem in the region, foster innovation and growth in the region's entrepreneurial sector.
Microfranchises, Vulnerable entrepreneurs, post-conflict, Social entrepreneurship, Business models
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